Sources
Clipmarks collection of key quotes
Hedge funds – The perfect storm
The New York Fed warned this week that hedge funds posed
the biggest threat to investors since the LTCM crisis of
’98. Back then, the Fed organised a $3.6 billion bailout.
But that kind of money is peanuts today. Another $60
billion was raised by the funds last year alone. Today,
they are a $1.6 trillion industry. And they are much
more leveraged than they were 10 years ago. Practically
every one of them is walking around with dynamite taped
to its belt.
What’s makes the situation especially dangerous is that
they all tend to show up in the same places at the same
time. “Returns are increasingly correlated,” says the
Fed, which is the Fed’s way of saying they are all doing
the same thing. So, when one blows up…they all might
blow up. And when they all blow up…it’s likely to send
a cloud of smoke and debris over the entire world’s
financial markets.
Source – Bill Bonner, Daily Reckoning, May 4, 2007
TM2.0 – Factor in corporate and consumer debt and the future for the global economy is challenging to say the least. On the other hand, local economies should do relatively well, as might the virtual / knowledge economies.
Commercial debt bubble inflates
Money…money…money! Deals…deals…deals..!
It is glorious to get rich…as Deng Tsaio Ping put it.
And many people, all over the world, think they are bound
for glory.
Meanwhile, the other head hangs down in despair. “Actual
underlying conditions of the world economy continue to
deteriorate,” it mumbles.
Larry Fink, CEO of Black Rock, a trillion-dollar fund
management company, spoke out last week and said that all
these mergers and acquisitions were going to cause “tomorrow’s problems.”
Why? Because they are all funded with debt. And lending standards for big, commercial deals have gone the same way as the lending standards for people buying trailers. “Standards have deteriorated to a level that we never even dreamed we would see,” said Fink.
Source -The Daily Reckoning, May 2, 2007 [dailyreckoning@electricmessage.co.uk]
